Laura WilesFCA has fined Bastion Capital London Limited (in liquidation) £2,452,700 for serious financial crime control failings in relation to cum-ex trading. The firm had failed to manage the risk of being used to facilitate fraudulent trading and money laundering.
Between January 2014 and September 2015, Bastion executed trading to the value of approximately £49bn in Danish equities and £22.5bn in Belgian equities, in traders that were highly suggestive of financial crime. The trading appears to have allowed the arranging of withholding tax reclaims in both jurisdictions. Bastion received £1.55 m commission, a significant proportion of its revenue in the relevant period.
Bastion ignored or failed to notice several red flags in relation to trades which had no apparent economic purpose except to transfer funds from a client’s controller to its business associates. FCA said that it should have consider financial crime risks when onboarding the clients and when executing the trading.
This case is the fifth brought by FCA in relation to cum-ex trading, and is part of measures taken by it in connection with cum-ex dividend arbitrage cases and WHT schemes.